Gail India Q3 Results Review - All-round Improvement; Prospects Remain Strong: ICICI Securities

ICICI Securities Report

GAIL India Ltd.'s has delivered another strong performance in Q3 FY24, with Ebitda up 14.6 times YoY to Rs 38.2 billion and profit after tax up 11.6 times YoY to Rs 28.5 billion, well ahead of our Ebitda/PAT estimates of Rs 32.1 billion/Rs 21.7 billion.

A strong recovery in trading margins, higher petchem volumes and earnings, and a turnaround in the LPG segment drove the YoY strength. FY25-26E is likely to see further drivers of outperformance:

1. Stronger tariffs and higher transmission volumes.

2. Trading segment guidance raised from Rs 40 billion to Rs 55 billion for FY24, with minimum Rs 40 billion guidance for FY25-26.

3. Lower costs for LPG/petchem and stronger volumes.

We raise FY24/25/26E earning per share and SOTP-based target price materially to factor in stronger visibility of earnings and higher multiples. Reiterate 'Buy'.

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